SEAH STEEL VINA CORPORATION, Plaintiff-Appellant v. UNITED STATES, UNITED STATES STEEL CORPORATION, Defendants-Appellees TMK IPSCO, VALLOUREC STAR, L.P., WELDED TUBE USA INC., BOOMERANG TUBE LLC, ENERGEX TUBE (A DIVISION OF JMC STEEL GROUP), TEJAS TUBULAR PRODUCTS, MAVERICK TUBE CORPORATION, Defendants
2019-1091
United States Court of Appeals for the Federal Circuit
February 14, 2020
Appeal from the United States Court of International Trade in Nos. 1:14-cv-00224-RWG, 1:14-cv-00259-RWG, Senior Judge Richard W. Goldberg. SEALED OPINION ISSUED: January 27, 2020. * This opinion was originally filed under seal and has been unsealed in full.
DOUGLAS GLENN EDELSCHICK, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee United States. Also represented by JOSEPH H. HUNT, CLAUDIA BURKE, JEANNE DAVIDSON; BRENDAN SASLOW, Office of the Chief Counsel for Trade Enforcement and Compliance, United States Department of Commerce, Washington, DC.
THOMAS M. BELINE, Cassidy Levy Kent USA LLP, Washington, DC, argued for defendant-appellee United States Steel Corporation. Also represented by MYLES SAMUEL GETLAN, SARAH E. SHULMAN, JAMES EDWARD RANSDELL, IV.
Before NEWMAN, SCHALL, and WALLACH, Circuit Judges.
WALLACH, Circuit Judge.
Appellant SeAH Steel VINA Corporation (“SeAH“) sued Appellee the United States (“Government“) in the U.S. Court of International Trade (“CIT“), challenging the U.S. Department of Commerce‘s (“Commerce“) final determination of an antidumping duty investigation covering certain oil country tubular goods (“OCTG“) from the Socialist Republic of Vietnam (“Vietnam“). See Certain Oil Country Tubular Goods From the Socialist Republic of Vietnam, 79 Fed. Reg. 41,973, 41,973 (July 18, 2014) (final determination) (“Final Determination“), as amended by Certain Oil Country Tubular Goods From the Socialist Republic of Vietnam, 79 Fed. Reg. 53,691 (Sept. 10, 2014) (order and amended final determination). The CIT remanded the case
SeAH appeals. We have jurisdiction pursuant to
BACKGROUND
I. Legal Framework
Antidumping duties may be imposed on “foreign merchandise” that “is being, or is likely to be, sold in the United States at less than its fair value.”
Commerce “determine[s] the estimated weighted average dumping margin for each exporter and producer individually investigated” and “the estimated all-others rate for all exporters and producers not individually investigatеd.”
If Commerce finds that the exporting country is a “non-market economy” (“NME“) country2 and “that available
In selecting surrogate values, Commerce “attempts to construct a hypothetical market value of [the subject merchandise] in the [NME].” Downhole Pipe & Equip., L.P. v. United States, 776 F.3d 1369, 1375 (Fed. Cir. 2015) (internal quotation marks, alterations, and citation omitted). Commerce‘s surrogate value determinations must “be based on the best available information regarding the values of [relevant] factors in a market economy country or countries.”
II. Procedural History
In July 2013, Commerce “received antidumping duty . . . petitions concerning imports of certain [OCTG] from,” inter alia, Vietnam, from domestic producers, including U.S. Steel Corporation (“U.S. Steel“), Maverick Tube Corporation, TMK IPSCO, Vallourec Star L.P., and Welded Tube USA Inc. (collectively, “Petitioners“). Certain Oil Country Tubular Goods from India, the Republic of Korea, the Republic of the Philippines, Saudi Arabia, Taiwan, Thailand, the Republic of Turkey, Ukraine, and the Socialist Republic of Vietnam, 78 Fed. Reg. 45,505, 45,506 (July 29, 2013) (initiation of antidumping duty investigations). Petitioners alleged sales of OCTG “at less than fair value” and “material injury to [the] industry in the United
Commerce “issued quantity and value . . . questionnaires to the eight companies named in the [P]etition,” but received timely responses from only two—one of which was SeAH. Prelim. I&D Memo at 2. Commerce selected SeAH and the other responsive company as mandatory respondents. Id.; see
In July 2014, Commerce issued its Final Determination. 79 Fed. Reg. at 41,973. Commerce calculated a 24.22% dumping margin for SeAH. Id. at 41,975. Commerce based this margin on various surrogate values. See J.A. 2203–06 (explaining Commerce‘s selection of Welspun Corporation Limited‘s (“Welspun“) financial statements for calculation of surrogate financial ratios, for SeAH‘s normal value), 2226–27 (declining to deduct a surrogate value for domestic inland insurance from SeAH‘s constructed export price); see also J.A. 2188–95 (selecting the World Bank‘s Doing Business 2014: India (“Doing Business Report“) as the best available information for brokerage and handling (“B&H“) surrogate values4 and explaining Commerce‘s
Both SeAH and Petitioners sued the Government in the CIT, challenging Commerce‘s Final Determination as unsupported by substantial evidence, each arguing for the use of different surrogate values for SeAH‘s margin calculation. SeAH I, 182 F. Supp. 3d at 1322; see J.A. 185 (Docket) (listing SeAH‘s complaint before the CIT), J.A. 187 (Docket) (listing order consolidating SeAH‘s case with U.S. Steel‘s case before the CIT). The CIT remanded to Commerce twice, for “reconsider[ation]” and “further explanation” of its surrogate value determinations. SeAH I, 182 F. Supp. 3d at 1330, 1335; see SeAH II, 269 F. Supp. 3d at 1347, 1358–59. On remand, Commerce calculated a 61.04% dumping margin for SeAH. J.A. 3046; see J.A. 2961–64 (on voluntary remand, setting aside Welspun‘s financial statements in favor of Bhushan Steel Limited‘s (“Bhushan“) financial statements); J.A. 2955–58 (deciding to adjust SeAH‘s constructed export price for inland insurance), 3017–21, 3033–37 (using modified inland insurance surrogate values from Agro Dutch Industries, Ltd. (“Agro Dutch“)); J.A. 2977–83, 3024–28, 3037–45 (providing further explanation of Commerce‘s B&H surrogate value by-weight allocation methodology). The CIT sustained Commerce‘s Final Determination, as amended by Redeterminations I and II, finding “Commerce‘s determinations . . . supported by substantial evidence,” and entered final judgment for the Government. SeAH III, 332 F. Supp. 3d at 1330–31; see SeAH II, 269 F. Supp. 3d at 1365.
DISCUSSION
SeAH contends that Commerce‘s margin calculation was unsupported by substantial evidence and not in
I. Standard of Review
We apply the same standard of review as the CIT, see Downhole Pipe, 776 F.3d at 1373, upholding Commerce‘s determinations if they are supported “by substantial evidence on the record” and otherwise “in accordance with law,”
In its Final Determination, Commerce selected Welspun‘s, not Bhushan‘s, financial records as the “best available information on the record” for SeAH‘s surrogate financial ratios. J.A. 2206; see J.A. 2205–06 (selecting Welspun as “a producer of OCTG,” with the closest available “production processes” to SeAH and a “financial statement [that] is contemporaneous, publically available, and evidences no receipt of countervailable subsidies“). However, following voluntary remand and the submission of additional evidence, Commerce found that there was “insufficient evidence to conclude that Welspun is actually a producer of [OCTG].” J.A. 2962. Commerce determined that Bhushan, a company it had previously disqualified because “its production process was not sufficiently similar” to SeAH, was aсceptable because there was “no superior option . . . available on the record.” J.A. 2963–64; see J.A. 2205 (disqualifying Bhushan, in the Final Determination, “because its production process is not sufficiently similar to [SeAH‘s]“). Commerce explained that Bhushan was the “best [available] information on the record” because “Bhushan produces [OCTG] and their financial statements are publicly available and contemporaneous with the [period of investigation (‘POI‘)].” J.A. 2964. The CIT sustained this determination as a “reasonable exercise of [Commerce‘s] wide discretion to choose from among imperfect options.” SeAH II, 269 F. Supp. 3d at 1350 (internal quotation marks omitted). SeAH argues that Commerce‘s selection of Bhushan was “patently unreasonable,” Appellant‘s Br. 55, because Bhushan‘s “production processes” are insufficiently similar to SeAH‘s to yield fair overhead and SG&A vаlues, id. at 48; see id. at 48–51, while the record evidence is insufficient to conclude that “Bhushan actually produced OCTG” in meaningful quantities, to yield fair profit values, id. at 53–54. We disagree with SeAH.
SeAH‘s counterarguments are unpersuasive. First, SeAH argues that Commerce has acted against its “established . . . preference for using the statements of surrogate-country producers that have production processes similar to those of the NME producer being examined.” Appellant‘s Br. 48. However, Commerce‘s mandate is to use the
Second, SeAH argues that because Bhushan‘s production processes are different from SeAH‘s, use of Bhushan‘s financial statements “distort[s] . . . overhead costs and SG[&A] expenses[.]” Appellant‘s Br. 53; see J.A. 2963 (characterizing SeAH as a “semi-integrated producer“). Commerce acknowledged that Bhushan‘s level of integration was different from SeAH‘s, but found that production of identical merchandise was more important than having identical production processes to calculate OCTG dumping margins as accurately as possible. See Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1191 (Fed. Cir. 1990) (explaining that “the basic purpose of the [anti-dumping]
Third, SeAH argues that “the record is not clear as to whether Bhushan actually produced OCTG,” Appellant‘s Br. 53, such that “when Commerce calculated a profit ratio based on Bhushan‘s financial statements, its result was not in any way an OCTG profit figure,” id. at 54. The CIT,
III. Commerce‘s Use and Selection of Surrogate Values for Inland Insurance Is Supported by Substantial Evidence and Otherwise in Accordance with Law
In its Final Determination, Commerce did not “deduct a surrogate value from [SeAH‘s constructed export price] to represent domestic inland insurance.” J.A. 2227. Commerce reasoned that, while the record included a contract between SeAH and a freight forwarder (“the Freight Forwarder Contract“) that suggested the freight forwarder had provided inland insurance, this did not “constitute[] an ‘insurance contract’ that would require a separate surrogate value” because “it is not uncommon for [freight forwarders]
SeAH‘s counterarguments are unpersuasive. SeAH argues that Commerce‘s inclusion of a surrogate value for inland insurance is contrary to “well-established common-law principles” in India that “[hold] common carriers liable for any damages suffered by the cargo while the cargo is in their possession.” Appellant‘s Br. 44. SeAH fails to establish how this is relevant to our interpretation of SeAH‘s contract. See J.A. 704 (providing that Vietnamese civil law governs SeAH‘s Freight Forwarder Contract). SeAH offers no further evidence or explanation as to its actual expenses. See Nan Ya Plastics, 810 F.3d at 1344 (explaining that Commerce need not “‘prove a negative’ about a respondent‘s pricing behavior if that respondent fails to provide evidence that would yield more representative calculations of its pricing behavior“); QVD Food, 658 F.3d at 1324 (“[T]he burden of creating an adequate record lies
SeAH further argues that, in selecting surrogate values, “Commerce was required to determine the cost in India of an agreement in which a carrier undertook to transport merchandise and to bear the cost of any losses during transport” and that Commerce‘s finding any additional cost “is directly contrary to Indian law.” Appellant‘s Br. 45–46. This, however, misapprehends what Commerce was required to do. Commerce was required to “construct a hypothetical market value of [SeAH‘s] product” using surrogate values, Downhole Pipe, 776 F.3d at 1375 (internal quotation marks and citation omitted), not a hypothetical price using surrogate laws, see Nation Ford, 166 F.3d at 1377 (“[A] surrogate value must be as representаtive of the situation in the NME country as is feasible[.]” (internal quotation marks and citation omitted));
IV. Commerce‘s Allocation Methodology for B&H Is Unsupported by Substantial Evidence
In its Final Determination, Commerce concluded that the Doing Business Report “represent[s] the best information available on the record for the valuation of B&H costs,” J.A. 2192, as a “contemporaneous, broad market average,” J.A. 2193. Commerce found it “appropriate” to allocate B&H cost by weight, i.e., it divided the surrogate B&H values from the Doing Business Report by ten metric tons, because ten metric tons was the example shipping container “weight used in the Doing Business [Report],” then multiplied it by the weight of SeAH‘s shipments, assuming that B&H cost was proportional to shipment weight. J.A. 2194 (citation omitted). Commerce explained
First, Commerce concluded that its “allocation methodology was reasonable given how [the] Doing Business [Report] calculated B&H costs.” J.A. 3042. The Doing Business Report aggregated data from “[l]ocal freight forwarders, shipping lines, customs brokers, port officials[,] and banks,” to “measure the time and cost (excluding tariffs) associated with exporting and importing a standardized cargo of goods by sea transport.” J.A. 1998. The Doing
Second, Commerce concluded that “it is appropriate to value B&H on a weight basis because this basis reflects [SeAH‘s] оwn service contract“; specifically, SeAH‘s Freight Forwarder Contract “provides evidence that [SeAH] itself paid certain B&H charges on a weight basis.” J.A. 3026. SeAH‘s Freight Forwarder Contract provided both prices per container and ton. J.A. 705 (providing “[p]rice of container” for forty foot and forty-five foot containers and “[p]rice of [b]ulk [c]argoes” by “[t]on“). These prices were meant to include customs clearance, J.A. 706, and other services that, according to Commerce, “[c]learly . . . include document preparation,” J.A. 3040; see J.A. 705 (providing for “[a]rranging and finishing Customs Declaration, clearing customs at port, customs inspection” and “[p]aying port charges and any kind[] [of] fee[s] that relate to [p]ort formalities“). However, the prices per ton for bulk cargo also expressly provide that they arе for “transport from SeAH” to regional ports, with price varying by destination, suggesting those fees are for transport (i.e., freight forwarding). J.A. 705; see CS Wind, 971 F. Supp. 2d at 1295 (“Common sense indicates that a half-full, twenty-foot container would incur the same document preparation expenses as a full twenty-foot container of a single type of good.“). The contract does not otherwise explain why or when per container or per ton price might be charged. See J.A. 704–06. Commerce conceded that SeAH‘s Freight Forwarder Contract “does not show how a Vietnamese company would charge for [B&H] services [separate from transportation],” but states that the contract is nonetheless “adequate to show that B&H costs can be incurred on a weight basis in Vietnam.” J.A. 3040; see Gov‘t‘s Br. 20 (arguing that Commerce “reasonably determined that [B&H] costs should be allocated by weight”
Third, Commerce supported its by-weight allocation methodology with reference to record evidence that “shows that at least some Indian B&H costs vary by weight.” J.A. 3042. Specifically, Commerce cited to a supplemental questionnaire response, submitted by a mandatory respondent, GVN Fuels Ltd. (“GVN“), in another OCTG antidumping duty investigation. J.A. 1763. The supplemental response disclosed five separate categories of B&H charges: “Agency Charges,” “Shipping [B]ill [C]harges,” “Dock Fee,” “Bill of [L]ading [C]harges,” and “Other [C]harges.” J.A. 1764. Of these, two categories (“Agency Charges” and “Other [C]harges“) were reported at cost “per metric ton.” J.A. 1764. Commerce concluded that “due to the uncertainty as to the exact nature of [the two by-weight] charges, [Commerce] cannot state definitively that it did [include document preparation and customs clearance], just as [SeAH] cannot be certain that it did not.” J.A. 3042. This is insuffiсient. See China Nat‘l Mach. Imp.
The Government‘s primary counterargument is unрersuasive. The Government argues that “[g]iven the mixed record of evidence showing that [SeAH‘s and] Indian [B&H] costs” were “sometimes charged [and paid] by weight,” Commerce acted within its “discretion.” Gov‘t‘s
CONCLUSION
We have considered the parties’ remaining arguments and find them unpersuasive. Accordingly, the Opinion and Order of the U.S. Court of International Trade is affirmed-in-part and reversed-in-part, and the case is remanded.